U.S. Treasury yields edged higher in choppy trading in a holiday-shortened week on Tuesday as investors prepared for the Federal Reserve to become more aggressive in fighting inflation after President Joe Biden nominated Chair Jerome Powell for a second term. read more The yield on 10-year Treasury notes was up 5.7 basis points to 1.682%, its highest level in a week and less than 10 basis points below the high for the year, hit in March. The yield on the 30-year Treasury bond was up 6.2 basis points to 2.040%. The move higher in yields was not uniform, however. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 1.4 basis points at 0.616% after touching its highest level since March 2020 on Monday. "The pressure on the Fed to react to the recent acceleration in inflation is building, not just from the so-called inflation vigilantes and the hawks on the Committee, but also from the progressive academics and from their peers at other central banks," said Steven Ricchiuto, U.S. chief economist at Mizuho Securities. Not all investors expect the Fed to act against inflation in the next few months. The Treasury Department auctioned $59 billion in 7-year notes on Tuesday, with direct bidders taking their highest percentage of the inventory since December 2019. That level of investor interest could mean that the recent rise in yields may be short-lived, said Thomas Simons, an economist at Jefferies. "The strong auction bid suggests that the market might finally be finding some footing," he said. "Does it make sense to price in more rate hikes over the next couple of years? We do not think so, and it looks like Direct bidders agree. We expect that the market will start to clean up the mess here, and it will trade well after Thanksgiving and into month-end." The yield curve slightly steepened, with spreads between 5- and 30-year Treasuries rising on Tuesday after touching their lowest levels since March 2020 the previous day. The yield on 5-year Treasury Inflation Protected Securities slipped to end at -1.695% and the yield on the 10-year TIP closed at -0.96, its highest end of day yield since Nov 3. November 23 Tuesday 4:17PM New York / 2117 GMT Price Current Yield % Net Change (bps) Three-month bills 0.0525 0.0532 0.000 Six-month bills 0.075 0.0761 0.000 Two-year note 99-197/256 0.6161 -0.014 Three-year note 99-106/256 0.9502 0.011 Five-year note 99-136/256 1.3472 0.023 Seven-year note 98-152/256 1.5899 0.041 10-year note 97-48/256 1.6824 0.057 20-year bond 98-116/256 2.0952 0.070 30-year bond 96-76/256 2.0408 0.063 DOLLAR SWAP SPREADS Last (bps) Net Change (bps) U.S. 2-year dollar swap spread 22.50 -4.00 U.S. 3-year dollar swap spread 21.00 -0.50 U.S. 5-year dollar swap spread 10.00 -0.75 U.S. 10-year dollar swap spread 5.25 -0.25 U.S. 30-year dollar swap spread -17.50 0.00